News

Richmond council modifies eminent domain plan, but prospects still in doubt

By Robert Rogers Contra Costa Times

Posted:
12/17/2013 01:06:52 PM PST

Updated:
12/18/2013 04:39:42 PM PST

RICHMOND -- The city took another step this week in its effort to use eminent domain to seize underwater mortgages and keep struggling homeowners in their homes, but staunch opponents made clear that the City Council still lacks the votes to implement the plan.

Even proponents acknowledged that major hurdles stand in the way after the City Council voted 4-2 Tuesday to approve Mayor Gayle McLaughlin's resolution directing city staff to "prioritize those neighborhoods that have been particularly hard hit by the housing crisis" and to step up efforts to partner with other cities in a possible Joint Powers Authority.

Opponents decry the plan as a needless distraction and point to state law, which requires a supermajority of five council votes to move ahead with using eminent domain. Three of the seven council members are already on record saying they will not support the plan.

Earlier this year, Richmond agreed to partner with San Francisco-based investment firm Mortgage Resolution Partners on crafting a plan to seize the mortgages.

During Tuesday's meeting, Councilman Jim Rogers, the crucial swing vote needed to reach a supermajority, again declared his opposition to the current iteration of the plan.

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"MRP told us they couldn't get the insurance to fully protect us from any risk," Rogers said. "That's a deal breaker for me."

City Manager Bill Lindsay said the investment firm has "agreed to indemnify the city" against legal costs incurred but that the promise doesn't "have an upper limit."

"Before the next phase, (MRP) needs to provide some sort of financial guarantee that backs up that promise, and that has not yet been worked out," Lindsay said.

More than 600 mortgages have been identified as potential targets of the plan, but that number looks sure to drop with the narrower guidelines approved Tuesday.

City Attorney Bruce Goodmiller said that if a Joint Powers Authority is formed, its members could vote to move ahead with using eminent domain to seize mortgages. The authority would also need to muster a supermajority, Goodmiller said, but its members are yet to be determined because no other cities have agreed to it yet.

Rogers called the Joint Powers Authority a potential, but unlikely, end-run around a council that will not sign off on becoming the first city in the nation to invoke this novel use of eminent domain.

But the plan's biggest supporters remained undeterred Tuesday, noting that many cities have expressed a willingness to consider joining Richmond and taking on Wall Street and Realtor groups opposed to the plan.

"This moves us another step forward," McLaughlin said. "We've researched this, and we know there are lawyers ready to defend our civil rights."

The revised plan declares that the city will use eminent domain only "when a clear public purpose is served" and that it will reach out to mortgage interests to seek compromises short of forcing reduction in the principal of mortgages.

Community groups on both sides of the issue rallied interested residents to attend the meeting and weigh in. More than 100 pro-eminent domain protesters gathered outside City Hall for a rally and filled the chamber during the meeting.

About 40 people spoke during the public comment period, many of them residents who said they needed relief from mortgages that were valued far higher than the current values of their houses.

Banking and Realtor groups have orchestrated a campaign and filed lawsuits opposing the idea of municipalities seizing mortgages.

Earlier this month, the American Civil Liberties Union filed its own lawsuit against the Federal Housing Finance Agency, seeking information on whether it has been influenced by the banking industry to oppose the plan.

Councilman Nat Bates, in a letter read by City Clerk Diane Holmes in his absence, said he opposes the plan but would propose in January that the city put the issue to voters on the 2014 ballot.